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Enthusiast Gaming mostly operates in the video-game industry and has three divisions – media and content, subscriptions, and e-sports and entertainment.JONATHAN NACKSTRAND/Getty Images

Enthusiast Gaming Holdings Inc.’s EGLX-T largest shareholder has launched an unusually personal proxy fight to replace the company’s chief executive officer and a majority of its board of directors, a battle that could ultimately oust the team that put the organization together.

In a public letter addressed to Enthusiast’s board, Greywood LLC, a New York-based investment firm, announced plans Tuesday to replace CEO Adrian Montgomery as well as a majority of directors, which could include Francesco Aquilini, who has worked with Mr. Montgomery for a number of years and whose family owns the Vancouver Canucks.

Proxy fights are common at this time of year because many companies hold their annual general meetings, in the spring, but typically these campaigns call for strategic changes, such as selling certain assets, or for rewarding existing investors by increasing dividends. Greywood is focused on replacing Enthusiast’s leadership, and singles out Mr. Montgomery for the company’s poor stock market performance.

Enthusiast, a media and gaming company, went public through a three-way merger in 2019, and its shares took off in the fall of 2020, soaring from roughly $1.60 apiece to more than $10 each by April, 2021. The past year has been misery for shareholders, however, with the stock losing three-quarters of its value and falling to $2.70 before the proxy battle was announced.

While some of this performance likely has to do with the recent technology stock selloff, Enthusiast has also struggled to make money. The company lost $52-million in 2021, and $27-million in 2020.

“Our review has highlighted significant issues with the company’s culture and governance, with the former attributable to Mr. Montgomery and the latter attributable to the board; both are materially impeding the company’s performance,” Greywood wrote in its public letter.

Many of the allegations have not yet been independently verified, but Greywood said it held discussions with “industry players, executive recruiters, prior employees, current employees, shareholders and other stakeholders.” Through these consultations, they concluded the board seems “completely unaware of the work atmosphere propagated by Mr. Montgomery and the many dysfunctional management relationships.”

“Our primary and clear conclusion is that the company’s current chief executive officer (”CEO”), Adrian Montgomery, is a detriment to the company’s management, operations, communications, and growth strategies,” the investment firm wrote.

Enthusiast did not return a request for comment.

Despite being so pointed with its intentions, Greywood has disclosed very little about itself. The public letter is not signed by any individuals, solely by “Greywood LLC,” and a website or history of the investment firm could not be located.

According to securities filings, Greywood has ties to two individuals, Marc Preston and Sasha Szabo, but their personal or professional histories also could not be found. Greywood did not return a request for comment.

Adding more complexity, Greywood itself isn’t the entity that holds the largest chunk of Enthusiast shares. Collectively, entities tied to the two individuals own 9.3 per cent of Enthusiast and they have signed Greywood’s securities filings, but most of the position is held by Vantage Trading LLC, where Mr. Preston is a managing member.

Vantage Trading started buying Enthusiast shares last fall, according to securities filings.

Enthusiast’s annual general meeting is scheduled for June, which means Greywood is going public with its intentions in an unusually tight window. However, the investment firm said it previously raised concerns in private about an alleged coziness between Mr. Montgomery and Enthusiast’s board of directors, but was rebuffed.

“We have tried in vain to engage with the board, and we were particularly dismayed when in response to our most recent constructive letter we received a terse, generic, disingenuous and dismissive e-mail. It has become apparent to us that this board works for the CEO,” Greywood wrote.

Enthusiast Gaming is the brainchild of Mr. Montgomery and Mr. Aquilini, who were directors of a capital pool company called J55 that merged with Aquilini GameCo., another of their entities, as well as with Enthusiast Gaming Properties Inc. After the three-way merger, the combined public company adopted the Enthusiast brand.

Enthusiast mostly operates in the video-game industry and has three divisions – media and content, subscriptions, and e-sports and entertainment. Media and content generates the vast majority of its revenue and is comprised of more than 100 websites that provide game reviews, livestreams, message boards and industry news. Enthusiast makes money by selling advertising on these platforms.

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